4 Takeaways From Jerome Powell's Testimony On The Economy

Jerome Powell responded to questions from Congress Tuesday on the Federal Reserve's actions to support the economy during the coronavirus pandemic.

The Fed will do everything in its power to support the economy, he said.

The Fed Will Continue To Buy Bonds: Last week, the Fed announced that it will be buying corporate bonds. The Fed has moved interest rates to near zero.

As a result, buying bonds will be the primary way the fed supports liquidity in the markets. As demand starts to normalize, The fed will slow the purchase of bonds.

Negative Intrest Rates: During his Senate testimony, Powell said he sees "mixed" evidence that negative rates could provide a stimulus to the economy.

In the past, Powell has said he does not believe that negative interest rates are a good fit for the United States.

Unemployment Benefits: Many Americans will lose a large sum of their unemployment checks in July.

When asked about unemployment benefits, Powell said: “you wouldn’t want to go all the way to zero on that.” Powell has yet to endorse a specific plan.

Debt: The Fed's balance sheet has grown at an astonishing rate to over $7 trillion. The economy after the coronavirus will have more debt, as businesses and consumers took on more debt.

“This isn't the time” to prioritize lowering federal debt levels, Powell said. 

Federal Reserve photo via Wikimedia

Posted In: Jerome PowellNewsEventsEconomicsFederal Reserve

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